August 27, 2009

 

CBOT Soy Review on Wednesday: Drift lower on speculative profit taking

 

 

Soy futures on the Chicago Board of Trade settled lower Wednesday, carving out modest declines on speculative profit taking.

 

CBOT September settled 1/2 cent lower at US$10.90 1/2, and November soy finished 2 1/2 cents lower at US$9.96 1/2. In pit trades, speculative fund selling was estimated at 3,000 lots in soy, and 1,000 lots in soyoil.

 

December soymeal ended unchanged at US$298.50. December soyoil finished 8 points lower at 37.09 cents per pound.

 

The market had come a long way, and without fresh supportive news traders took the opportunity to take some profits, said Dan Basse, president AgResource Co.

 

Near term weather remains non-threatening for Midwest crops and with early harvesting beginning in the deep south, market longs have gotten a little nervous, Basse said.

 

An absence of follow through buying on early price strength in recent sessions is promoting thoughts of a near term top in the market, with bearish signals from outside financial markets helping cap advances as well.

 

Weather conditions remain conducive to late maturing crops and without a frost threat or new export news, buyers are taking a step from the market, analysts said.

 

Nevertheless, tight old crop inventories, and the lingering uncertainty of new crop production potential remain underpinning features to limit downside risks as well.

 

The choppy theme is expected to linger with a battle between big demand and big supply a feature until the developing crop gets past the fear of a premature growing season, said Basse.

 

Meanwhile, DTN Meteorlogix said Midwest temperatures will remain below normal during the next five days. Daytime highs will be around nine degrees Fahrenheit below normal. This cool trend will continue to slow down crop progress.

 

Frost remains out of the forecast scenario through the first part of September. Upper-air high pressure (ridging) will bring mild temperatures and mostly favorable conditions for crop progress going into September, Meteorlogix said.

 

On tap for Thursday, U.S. Census Bureau is expected to estimate the July soy crush at 126.8 million bushels, down from last month on the tightness of available soy supplies and poor processor margins, according to a survey of industry analysts. The Census Bureau's crush report is scheduled for release Thursday at 8 a.m. EDT, (1200 GMT).

 

U.S. Department of Agriculture weekly export sales report is scheduled to be released at 8:30 a.m. EDT, and analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended Aug. 20 in a range of 750,000 to 1,600,000 metric tonnes. Soymeal export sales are seen between 50,000 and 200,000 tonnes, while soyoil sales are pegged between 5,000 and 20,000 tonnes.

 

 

Soy Products

 

Soy product futures settled mostly lower, drifting in unison with soy. Soymeal futures were mixed, with nearby meal futures continuing to break away from the defensive theme filtering through the rest of the complex. Tight availability of soymeal supplies as a result of slower crusher activity served as the catalyst for the strength in nearby contracts, analysts said.

 

Soyoil futures ended lower, succumbing to spillover weakness from soy and crude oil futures.

 

December oil share was 38.36%, while the November/December soy crush ended at 68 1/4 cents.